Question 6 Selected financial data for a recent year for two clothing competitors, Le Château Inc....
Question 6
Selected financial data for a recent year for two clothing competitors, Le Château Inc. and Reitmans (Canada) Limited, are presented here (in thousands, except share price):
| Le Château | Reitmans | ||||
| Current assets | $116,724 | $319,362 | |||
| Total assets | 168,490 | 542,083 | |||
| Current liabilities | 36,038 | 121,172 | |||
| Total liabilities | 108,136 | 160,915 | |||
| Loss to common shareholders | (35,745) | (24,703) | |||
| Share price | $0.27 | $3.96 | |||
| Weighted average number of common shares | 29,964 | 64,079 |
For each company, calculate the following values and ratios. Where available, industry averages are included in parentheses. (Round basic earnings per share to 2 decimal places, e.g. 5.25 and round all other amounts to 1 decimal places, e.g. 5.2 or 5.2%. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any answer field blank. Enter 0 for not applicable amounts.)
1.Working capital (n/a)
2.Current ratio (1.8:1)
3.Debt to total assets (57%)
4.Basic earnings per share (n/a)
5.Price-earnings ratio (20.0 times)
| Le Chateau | Reitman's | |
| working capital | $_____ | $_____ |
| current ratio | ______;1 | ______;1 |
| debit to total assets | ______% | ______% |
| basic earnings per share | $_____ | $_____ |
| price-earnings ratio | ______ times | ______ times |
Compare the liquidity, solvency, and profitability of the two
companies and their industry. (If a comparison cannot
be made, enter Not Meaningful as the answer.)
Below fill out the profitability of the two companies decides whether it is more or less liquid:
| Le Chateau | Reitmans | |
| Liquidity | Is it more liquid or less liquid | Is it more liquid or less liquid |
| solvency | Is it more liquid or less liquid | Is it more liquid or less liquid |
| profitability | Is it more liquid or less liquid | Is it more liquid or less liquid |
Below fill out the comparison with industry and decides whether it is better or worse than the industry average:
| Le Chateau | Reitmans | |
| Liquidity | Worse or better than industry average | Worse or better than industry average |
| Solvency | Worse or better than industry average | Worse or better than industry average |
| Profitability | Worse or better than industry average | Worse or better than industry average |
Homework Answers
| Le Chateau | Reitman's | |
| working capital=Current asset- current liability | 116724-36038 | 319362-121172 |
| 80686 | 198190 | |
| current ratio=current assets/ current liability | 116724/36038 | 319362/121172 |
| 3.24 | 2.64 | |
| debt to total assets= (total liability- current liability)/ total asset | (108136-36038)/168490 | (160915-121172)/542083 |
| 0.428 | 0.073 | |
| basic earnings per share= Net income( loss)/ Number of common shares | (35745)/29964 | (24073)/64079 |
| -1.19 | -0.38 | |
| price-earnings ratio= Market price/ earning per share | 0.27/-1.19 | 3.96/-0.38 |
| -0.23 | -10.42 | |
| Le Chateau | Reitmans | |
| Liquidity | Is it more liquid | Is it less liquid |
| solvency | Is it more solvent | Is it less solvent |
| profitability | Not meaningful as both of them have loss | Not meaningful as both of them have loss |
| Le Chateau | Reitmans | |
| Liquidity | better than industry average | better than industry average |
| Solvency | Worse than industry average | Worse than industry average |
| Profitability | not meaningful | not meaningful |
Add Answer to:
Question 6
Selected financial data for a recent year for two clothing
competitors, Le Château Inc....
Question 6 Selected financial data for a recent year for two clothing competitors, Le Château Inc....
Question 6 Selected financial data for a recent year for two clothing competitors, Le Château Inc. and Reitmans (Canada) Limited, are presented here (in thousands, except share price): Le Château Reitmans Current assets $116,724 $319,362 Total assets 168,490 542,083 Current liabilities 36,038 121,172 Total liabilities 108,136 160,915 Loss to common shareholders (35,745) (24,703) Share price $0.27 $3.96 Weighted average number of common shares 29,964 64,079 For each company, calculate the following values and ratios. Where available, industry averages are included...
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